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Thursday, June 16, 2016

A Draft Beer State of Mind

Bart Watson and I were on the same page. Yesterday, I ran across this data set from My Beer Haul that shows the percentage of breweries in each state that bottle or can their beer. It all comes from internal data, and I can't verify whether it's accurate or not, but based on the brewery counts, it at least looks quite up to date. The national average is 45%. But when you start scanning the state-level data, you see incredibly wide variance. I dumped the numbers into Excel and did a few sorts. I quickly realized that brewery number really affects the percentages (only one of North Dakota's nine breweries bottles or cans--but all of Puerto Rico's four do), so I eliminated states with fifty or fewer breweries. Here's the variance at the top and bottom of the list

There are a lot of ways you could slice and dice these data, and my crude cut-off doesn't capture much of the nuance. Sorting by breweries per capita would be more informative, but that would require me to find the populations of 50 states, and the benefit doesn't justify the effort. The upshot is evident in these numbers: there's huge variation state to state.

Bart Watson, the Brewers Association's economist, posted a highly relevant article yesterday that further illuminates this phenomenon. He finds exactly the same thing.

The first note is that the size of the on-premise beer market varies
wildly by state. This is due to a variety of factors: beer’s share of
beverage alcohol, overall beer consumption levels, number of on-premise
outlets, on-premise culture, consumer preferences and socioeconomic
factors.... [T]he variations are pretty huge, ranging from almost 44 pints per 21+
adult in Colorado to 5.5 pints per 21+ adult in Mississippi.

He then adds another layer, explains it in technical statistics-ese, and summarizes his finding this way:

In crunching the numbers, the size of the on-premise beer market appears
to be far more important for brewery per capita numbers than the size
of the overall beer market.... In layman’s terms, that means when you know both the size of the
draught market in a state and the size of the total beer market, the
size of the draught market is a much better predictor of the number of
small and independent breweries.

(For you stats folk, his r-squared was a muscular 0.7, which ain't bad.) Watson has three cool graphs, so click through and read his piece.

The data suggest that states where on-premise is more important to the
beer market, craft does better in the off-premise. The logic is fairly
simply: in places where more beer lovers are in bars and restaurants
drinking beer and thus encountering craft, off-premise locations have
better sales for craft brewers as well.

So there you have it. Drink on draft and you will create a virtuous cycle that buoys local breweries.